Divergence Bitcoin Setups Summary - BTCUSD Bitcoin Divergence Strategy

Classic Bearish Divergence Setup - HH price, LH indicator - Indicates underlying weakness of a price trend - Warning of a possible change in the trend from up to down.

Classic Bullish BTCUSD Trade Divergence - LL price, HL indicator - Indicates underlying weakness of a price trend - Warning of a possible change in the trend from down to up.

Hidden Bearish Bitcoin Trade Divergence - LH price, HH indicator - Indicates under-lying strength of a price trend - Mainly found during corrective rallies in a downwards trend.

Hidden Bullish BTCUSD Trade Divergence - HL price, LL indicator - Indicates under-lying strength of a price trend - Occurs mainly during corrective declines in an up-ward trend.

Illustrations of the divergence terms:

M shapes dealing with Bitcoin Price highs

Divergence Bitcoin Setups Analysis - BTCUSD Bitcoin Divergence Trade Setups Tutorial

M-shapes: Divergence Terms

W-shapes dealing with price lows

Bitcoin Divergence Setups Summary - Learn Bitcoin Divergence Setups Examples Explained

W-shapes: Divergence Terms

These are the shapes to look for - when using divergence trade setups.

One of the best indicators for using with this divergence setup is the MACD Indicator - as a divergence signal, MACD divergence is a high probability set-up to enter a trade. But as with any signal there are certain parameters that have to be observed to make this signal a high probability trade setup.

Getting straight in to a trade position as soon as you see this setup is not the best strategy to use. This divergence setup should be used in combination with another technical indicator to confirm the direction of the BTCUSD price trend. A good system to combine this setup with is the moving average cross over trading method.

Be aware this setup on a smaller timeframe isn't so significant. When divergence is seen on a 15 minute price chart it might or may not be very crucial as compared to the 4 hour chart time-frame or the 1 day time=frame.

If seen on a 60 minute trading chart, 4 hour chart, or daily time-frame, then begin looking for other factors to indicate when the Bitcoin price may react to the divergence.

This brings us to a key point when using this divergence signal to enter a trade: on a higher time frame MACD divergence can be a fairly reliable indicator of a change in price direction. However, the big question is: WHEN? That is why getting straight in to a trade as soon as you see this divergence setup isn't always the best trade strategy.

Many Bitcoin traders get caught out by entering the market too soon when they see MACD divergence setup. In many cases, price has still got some momentum to continue in current market trend direction. The Bitcoin trader who has jumped in too soon can only stare at the screen in dismay as price shoots through his stoploss taking him out.

If you simply look for this divergence setup without any other considerations you will not be aligning yourself with the best chance, so to increase the chance of making a successful trade you should also look at other factors, specifically signals from other indicators.

What other factors should you consider when using this divergence setup?

1. Support, Resistance and Fibonacci levels on higher timeframes

Another way to greatly increase the chances of a winning trade is to observe the higher time-frames before opening an order based on the lower time frame.

If you observe that the hourly, 4 hour or daily price chart has met a major resistance, support or Fibonacci level then the probability of a successful trade based on divergence setup on a lower time frame at this point increases.

2. Reward:Risk Ratio: BTC USD Crypto Trade Capital Management Rules

And finally, when looking for divergence trade setups, it's very important that you enter the trade correctly, so that you have a good risk: reward ratio and only open trade positions which have more profit potential than what you're risking. If you understand how to enter a trade properly, you can measure your risk: reward ratio before you open a Bitcoin Crypto Currency trade. That way, you can only select to open trading orders that offer a favorable risk reward ratio.

Finally, when used correctly & combined with other technical indicators to confirm this divergence signal, divergence setup can offer a good trading method for trading BTCUSD Bitcoin Crypto.

Get More Tutorials: